Supreme Court increases compensation to Rs. 10 lakh in cheque dishonour case under Section 138 NI Act

SC modified sentence in dishonour of cheque case under Section 138 NI Act. Court expressed concern over inadequate "flea-bite" sentences imposed by lower courts. Respondent-accused sentenced to six months simple imprisonment. Considering cheque amount of Rs. 6,19,488/-, court directed payment of Rs. 10,00,000/- compensation to appellant. Court emphasized need for realistic compensation including interest, noting traditional view of criminal proceedings solely for punishment creates difficulties for complainants as civil suit limitation may expire. Default in compensation payment results in additional six months simple imprisonment. Appeal disposed.

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Issues:
Cheque bounce case - adequacy of punishment and compensation

Analysis:
The case involved a cheque bounce incident where the Respondent issued a cheque to the Appellant, which bounced upon presentation. The trial court convicted the Respondent under Section 138 of the Negotiable Instruments Act and sentenced him to six months imprisonment and a fine. The Additional District Judge confirmed the conviction but reduced the sentence to three weeks. The High Court modified the sentence, directing the Respondent to pay compensation of ` 2,00,000/- or undergo two months imprisonment. The Appellant appealed, seeking higher punishment and compensation.

In the case of Suganthi Suresh Kumar v. Jagdeeshan, the Supreme Court expressed dissatisfaction with inadequate sentences in cheque bounce cases, emphasizing the need for appropriate punishment to uphold the legislative intent behind Section 138. The court highlighted that non-payment of the cheque amount should result in a sentence that aligns with the purpose of the law, preventing accused from taking the offense lightly.

Similarly, in R. Vijayan v. Baby and Anr., the court discussed the necessity of compensating the complainant in cheque bounce cases. It emphasized that courts should consider directing payment of compensation, up to twice the cheque amount, to reimburse the loss suffered by the complainant. The court stressed the importance of practical and realistic compensation, including interest on the cheque amount at a reasonable rate.

In light of these judgments, the Supreme Court modified the impugned order, sentencing the Respondent to six months imprisonment and directing him to pay compensation of ` 10,00,000/- to the Appellant. Failure to pay the compensation would result in six months imprisonment. The court ordered the immediate arrest of the Respondent, who had not yet surrendered, upon receipt of the judgment. The court appreciated the assistance of the amicus curiae and disposed of the appeal accordingly.

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